Planning on having your teen take out student loans? The credit crunch has taken a huge bite out of the private student loan business, says Mark Kantrowitz, publisher of FinAid.org. Dozens of lenders have closed shop, and loan amounts have declined 29% in the past year. What to do?
Look to government loans first. The feds have increased the limit you can borrow in unsubsidized Stafford loans by $2,000 and lowered interest rates on subsidized loans to 5.6% for the 2009-10 school year.
Count on summer jobs. Over the next four years, the federal government will gradually increase the limit on the amount of wages -- from $3,750 to $6,000 -- a student can earn before they are considered assets. (Colleges look at assets to determine the amount of aid a school will offer a student.) That means student jobs are more important than ever.
Improve your credit score. Lenders are looking for the least risky borrowers, so stellar credit is key. Bankrate.com has advice on boosting your score.
Find a great co-signer. No time to improve your score? Ask a financially secure family member to co-sign your teen's loan.
Look to government loans first. The feds have increased the limit you can borrow in unsubsidized Stafford loans by $2,000 and lowered interest rates on subsidized loans to 5.6% for the 2009-10 school year.
Count on summer jobs. Over the next four years, the federal government will gradually increase the limit on the amount of wages -- from $3,750 to $6,000 -- a student can earn before they are considered assets. (Colleges look at assets to determine the amount of aid a school will offer a student.) That means student jobs are more important than ever.
Improve your credit score. Lenders are looking for the least risky borrowers, so stellar credit is key. Bankrate.com has advice on boosting your score.
Find a great co-signer. No time to improve your score? Ask a financially secure family member to co-sign your teen's loan.
